LONDON (Reuters) - Britain has rejected calls from lawmakers to give regulators more powers to protect consumers from unregulated investment products as thousands face losing money on “mini-bonds” bought from London Capital & Finance (LCF), which collapsed in January.
The government said it would, however, fast-track conclusions from its review of collapse of LCF that left 11,500 bondholders likely to lose most of their 237 million pounds in investments.
Parliament’s Treasury Select Committee (TSC) said in August that the failure of LCF showed the Financial Conduct Authority (FCA) needed powers to formally recommend extending its remit to cover unregulated parts of the financial system.
The FCA can only comment on activity around the so-called regulatory perimeter.
“Decisions on which activities should be within the perimeter of regulation should ultimately be for ministers, with approval by parliament,” the government said in a response to the TSC on Thursday.
It also rejected calls to give the FCA powers to ask companies it does not regulate for data on their activities. LCF itself was regulated, but the mini-bonds it sold to raise funds for companies, were not.
“Asking the FCA to gather and process data from unauthorized firms would add significantly to the FCA’s supervisory responsibilities and have considerable resource implications,” the government said.
It said it was working with the FCA to consider if further steps were needed to ensure that consumers understand the risks of buying unregulated products as part of its response to LCF.
“The conclusions of the government’s work in response to the failure of London Capital & Finance, including on the financial promotions regime, will be brought forward as soon as possible,” the government said.
Reporting by Huw Jones; Editing by Kirsten Donovan